The common definition of auditing is the evaluation of any organization, person, system, enterprise, process, product or project. This term commonly refers to the audits in the accounting, but alike concepts also last in the quality management, energy conservation and project management.
In US, the audits of the publicly traded organizations are governed by the PCAOB or Public Company Accounting Oversight Board rules. This audit is known as integrated audit, where the auditors, in addition to the opinion on financial statements, should also express the opinion on the usefulness of the internal control of any company, over the financial reporting.
Now a days, new kinds of integrated auditing are becoming available which use united compliance material. Due to increasing amount of regulations and need for the operational transparency, the companies are also adapting risk based audits which can cover numerous standards and regulations from any single audit event. This approach is new but necessary in some sectors to make sure that all useful governance concerns can be met without copying any effort from both the audit hosting and audit resources.
Relation between audit and accounting
Usually, the audits are performed to determine the reliability and validity of information, it also offer an assessment of the internal control of any system. The aim of any audit is to signify an opinion of any system/organization/person in question, under the evaluation formed on the work done on the basis of a test.
Due to the constraints, an audit requests to offer just reasonable assurance which the declarations are free from any material error. Thus, often statistical sampling is adopted in the audits. In case of financial audits, a group of financial statements are known as fair and true when these are free of the material misstatements- an idea which is influenced by both qualitative and quantitative factors.
Auditing is also a very essential part of the accounting. Conventionally, the audits were associated with acquiring the information about the financial records and financial systems of any business or any organization. However, the recent auditing has started to include some non-financial areas like as security, safety, environmental concerns and performance of the information systems.
With the government agencies and non-profit organizations, there is an increasing requirement for the performance audits, and examining the success in the pleasing mission objectives. Hence, there are some audit professionals now who expertise in the information system audits, environmental audits and security audits.
In the cost accounting, there is a procedure for verifying the expense of producing or manufacturing any article, on the basis of the accounts calculating the use of the labor, material, and other items of the expense. In general terms, the cost audit describes an accurate and systematic verification of records and the cost accounts, and also checking for the adherence to the objectives of the cost accounting.
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